Retirement Commissioner calls for limited superannuation access for new migrants

The AM Show acting host Ryan Bridge has come out swinging against the New Zealand superannuation system, saying it needs some major changes. Credits: Image - Getty; Video - The AM Show

The Retirement Commissioner has doubled down on her 2016 proposal to increase the time migrants have to wait to get superannuation.

It comes after a new Member's Bill from New Zealand First's Mark Patterson called for an increase to the minimum residency for super from 10 to 20 years, which would steer New Zealand closer to other OECD nations.

"In New Zealand, you can arrive in your 50s, you can be here for ten years, not work, and then at 65 you get the same amount as your neighbour up the road who lived here their whole life," Retirement Commissioner Diane Maxwell told RadioLIVE.

In 2016, she proposed increasing the threshold to 25 years, as well as increasing the retirement age to 67 by 2034.

The Old Age Pension Act was introduced in 1898, which made the pension available to "every person of the full age of 65 years or upwards".

Ms Maxwell says it was introduced at a time when "very few people lived to 65", suggesting it has become outdated because people are now living much longer.

Figures estimate that in 20 years' time, there will be 1.3 million people over the age of 65 in New Zealand, up from 750,000 today. The cost of superannuation will also increase in 20 years, from the current $30 million a day to $98 million a day.

"This is a global issue," Ms Maxwell told RadioLIVE. She said New Zealand needs to be stricter about who is able to receive superannuation, particularly migrants who have not contributed to New Zealand during their time in the country.

Ms Maxwell floated the idea of New Zealand changing the rules for new migrants coming to New Zealand, and letting the current rules apply to those who are already here.

"If you're already here, then you operate on today's terms, but for new people coming in, we have to look at a new set of rules," she suggested.

If the superannuation rule was changed to 20 years, Ms Maxwell said New Zealand would save about $4 billion in about 20-25 years' time. She said it's an issue New Zealand needs to address because often migrants bring their retired parents to join them.

"In most counties, what you get is a relationship between what you put in and what you get out," she said. The OECD average is 26 years in the country before people get the pension, compared to just 10 years in New Zealand, she added.

Mr Patterson said last week that changes to superannuation access would "give fairness to Kiwis who have paid taxes here, lived here all their lives and it also makes superannuation more affordable".

When asked for her opinion on the matter, Prime Minister Jacinda Ardern told The AM Show on Tuesday there are "a whole lot of complications and factors we have to keep in mind".

"What I would say is that when it comes to the sustainability of super, we have already made moves, doing things like going back and making sure we reinstate contributions to the New Zealand super fund," she said.

Government contributions to the Super Fund were suspended between 2009 and 2017, but were resumed in December 2017 under the new Government. Contributions are set to increase over the next four years, with $1 billion planned for the Fund in 2019.

Finance Minister Grant Robertson said in a statement last year that the Government is projected to increase the size of the Fund to over $63 billion by 2022/23.

"We did that when we first came into office because we are concerned about making sure superannuation is sustainable," said Ms Ardern.